Why Wii Didn't "Win" 2007

Who's winning the console war right now? If you answered "Wii", then guess again.

Although the Wii has indisputably made its way into more homes than the Xbox 360 or the PlayStation 3, it should not be considered the most successful console of this generation so far. No, I'm not trying to trip you up, either: Nintendo DS is not the answer. Despite falling a few million units behind in terms of console sales, the Xbox 360 is actually winning this generation. Let me explain why.

There's more to winning the console race than simply selling more units than your competitors. This has always been a fact, but was more difficult to see in the two-competitor, Sega/Nintendo or Sony/Nintendo eras, because the winner in both cases just so happened to sell more units. Indeed, there is obviously a strong correlation between overall success and the number of consoles sold. A more fair system in today's environment, though, would be to look at five different metrics.
Total Platform Spending
First, let's take a look at total console revenue for 2007. Worldwide data for this particular category is difficult to find, so we'll stick with the NPD data for the United States. During 2007, the Xbox 360 controlled $4,800,000,000 ($4.8 billion, if that's too many zeroes for you) of total consumer revenue. Let's compare this to its competition: the Wii earned $3.5 billion and the PS3 won $2.2 billion of sales, with all other platforms accounting for another $3.2 billion.

How could the Xbox 360 control so much more of the market? First, recall that this is total revenue, so the fact that the 360 costs more on average than the Wii certainly takes effect here. But this also suggests that the 360 platform persuades more customers to invest in accessories and services. Indeed, Xbox Live now has over 10 million members, although that includes non-paying silver members. Games are also an important part of this number, but that leads us into the next metric.

"The console race is not as clear cut as it looks. In a three-console environment, it's important to look past the simple "units sold" number, and dig deeper for the facts."
Attachment Rate
One of the most important numbers one can use to determine whether a console's success is based on lasting value or fad power is by looking at the "attachment rate." This measures how many games have been sold, divided by the number of consoles sold. In other words, it's the average number of games each console owner has for that system. The Xbox 360 has an attach rate of 7, while the Wii has a rate of about 5 and the PS3 trails with slightly less than the Wii.

The PS3 presents an interesting case here as the counter-argument to this particular gauge of success. Obviously, the PS3 is trailing in third place so far this generation, so remember that the PS3 is able to attain that attach rate with a much smaller number of both hardware and software sold than the Wii. The key to success here is to have a high attach rate while also maintaining strong platform sales. Few would argue that the Xbox 360's sales have been lackluster, so having a high attach rate is a sign that customers aren't simply buying their 360s for one game (say, Halo 3) and then putting them away.

On the other hand, this is exactly what the Wii is facing. A worryingly large number of consumers are buying Wiis purely for Wii Sports, which is included in the box. These consumers are great for Nintendo's bottom line but do not provide any lasting value to the company. Furthermore, having a large contingent of one-game consumers makes it difficult for Nintendo to woo third parties that otherwise would be dazzled by the Wii's sales numbers.

Third Party Support
Three issues keep the Wii from hosting the very best third party content. First, the console's gimpy power precludes it from running truly next-gen titles like Call of Duty 4, Mass Effect or Uncharted. Second, third parties have difficulty jumping into bed with Nintendo because they know from past experience that Nintendo's own franchises will always be the star of the show on Nintendo platforms. Third, the hype effect from point two plays directly into sales. Look at the numbers for Zack and Wiki, for example, and compare those to the sales of Mario and Sonic's 2008 Olympics game. It's enough to make grown men cry.

The 360 wins in this bout as well. While the PS3 is powerful enough, for sure, it's also the most difficult platform of this generation for development. The 360 combines a balance of development efficiency and raw power. Further, the Live Arcade system, while under assault from both Nintendo and Sony, continues to offer the widest range of downloadable games and the lowest barriers to entry by smaller developers.

Return on Investment
This is a category that is being won by all three consoles, and in different ways. Nintendo obviously has enjoyed a meteoric resurrection from the cusp of destruction at the end of the GameCube era to once again sitting in the driver's seat of the industry with the Wii. Nintendo's stock value has shot up over the past few years, and although it has cooled as of late, it still sits many times higher than where it was even in the best days of the GameCube era. Profits in the Mushroom Kingdom are also huge, as the Wii appears to all but print money for the company. Due to the system's basic architecture, development costs were not as high as the competition (Sony, for example, spent over a billion dollars developing the Cell processor, according to some reports). Although this is certainly good news for them, the perspectives of the other two players make clear that "winning" doesn't have to mean selling the most systems.

Microsoft has successfully made the Xbox line a permanent part of the gaming industry. If the 360 had flopped, the original Xbox could have been looked back upon as a mere flash in the pan. Rather, the 360 is more dominant than its predecessor and plays a pivotal role in Microsoft's larger strategy moving forward. With the era of Windows-monopolized computing drawing to a close and its venerable Office suite under constant attack by competitors, Microsoft desperately needs to establish itself as the number one entity in a new industry.

We saw the signs of this again with their acquisition announcement of Yahoo last week. Microsoft needs to succeed in the console space because that is their way of moving from the desktop into the consumer electronics area. The Zune has been a dud, but the 360 shows promise. Even if the 360 continues to be a loss leader (although it seems to have finally begin showing signs of profit potential), it's an important investment in Microsoft's future.

Sony is in a similar boat. The company had already bet the farm on the PlayStation brand long before the launch of their most recent console. Yet even more important this time around was that they made the Blu-ray spec the gold standard of HD content. By including the drive in the PS3, they quite literally put all of their eggs in one basket. Although the PS3 has not performed exceptionally well since launch, it appears to have sold enough to seal the fate of the HD war.

Even if the PlayStation 3 does not reach the same success the PS2 enjoyed, the fact that the system allowed Sony to control what may be the last major optical media format is a big deal and earns them residuals on every disc and player sold, even if they're made by other companies. Indeed, especially if the PS3 does not sell terribly well, this new source of income will be vital to the company.

Future Positioning
This really should be the year of the PlayStation 3, with a variety of very important exclusive titles only months away. Nintendo will continue to reap rewards from their first party games, and the Wii should continue to sell well. Microsoft has a relatively strong lineup, but it will be difficult to replicate the truly outstanding library additions of 2007. It's really a tossup, here. The PS3 has the least momentum but the most left in the tank. The Wii has already leapt ahead but may have difficulty sustaining that growth in the months ahead. The 360 has followed the most stable pattern of growth, but may get truly overtaken if one of its competitors does as well as they hope.

So Who Won?
In my book, the Xbox 360 wins in terms of revenue, third party support and attachment rate. It's in a close race with the others in terms of Return on Investment, which the Wii wins and Future Positioning, where Sony shows an edge. The idea here is not to cause a massive outrage among the fanboys, but to simply point out an important fact: the console race is not as clear cut as it looks. In a three-console environment, it's important to look past the simple "units sold" number, and dig deeper for the facts. Let's hope that 2008 provides just as interesting an environment for gaming as 2007 did.

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Again its a good American view using NPD numbers. But nothing more if you use only one set of numbers from one region its always a biased opinion and has no real say on the "WAR".

360 won the American console Battle in 2007, even then that would be up for debate because the overall info is still limited and unless you go by pure overall profit numbers alone, its going to have an air of fanboyism and bias in it no matter who you root for, no one person can decide which system is acctually better than another. Its all Opinion based on your own taste.

As for the "War" its still to early in this Gen's life to say who's Won the war, you can only say whos currently winning in profit numbers, and that can change at any time! Currently based on what little info we have of total Worldwide sales and profit numbers, Wii is winning overall in the generic sense of profit.

Game quality overall for sure was won by 360, but then again it was out a year before PS3 and Wii shouldn't we be comparing the first year titles to first year titles to keep this a true match? Even then i would say its a close call between 360 and Wii and overall 360 probably had as many if not more quality games in the first year than Wii did, that has alot to do with 3rd partys not getting on board right away though